Challenges and opportunities in outsourcing and shared services

Outsourcing and shared services altered the way Saudi businesses operated, and since its introduction in the 80s, the market has grown exponentially. During the introduction of the industry, organisations viewed it as a cost effective way to manage and scale their business. Since then, the industry has expanded and evolved from a pure cost-efficiency model to an innovative value-creation model. This has opened doors to creative ways for organisations to thrive in the market despite legalities, regulations, mergers, acquisitions, scaling and growth. 

Challenges

With every new disruptive technology comes unknown challenges that arise. With outsourcing and shared services, many organisations experience the risks associated with data security, performance and resilience, the provider’s compliance with laws and regulations, loss of intellectual property and ability to terminate service without excessive termination penalties. 

Using any third party provider will require organisations to transfer information to them or across different systems as a part of their cloud service, and this can cause concern especially if the information is sensitive or confidential. This increases the risk of cyber breaches which outsourcing and shared services providers address through auditing of security processes and reinforcing potential weak points. Organisations need to clarify with their provider the security and risk measures they undertake before choosing a provider.

Legal and regulatory compliance is another hurdle for outsourcing and shared services providers, as regulations usually lag behind technology which may affect how organisations consume services. Therefore, ensuring your outsourcing and shared services provider is compliant is essential and having processes in place to address regulatory changes that may affect your service is important for your operations.

Opportunities

Numerous organisations adopt outsourcing and shared services for various reasons as implementation frees up key resources, improves time and cost efficiency, generates synergy and streamlines process and reductions in operating costs. The Saudi government and public sector departments are also taking advantage of outsourcing and shared services to simplify and enhance services.

Best practices

Organisations need to have a clear vision of what they want to achieve through implementing outsourcing and shared services; this gives clear direction when searching for a provider and the services required. To ensure operations run smoothly, processes and tasks need to be clearly distributed between the organisation and provider. During times of change, errors and delays can increase and efficiency decreases; implementing change management to support employees can help avoid this.

Conclusion

The advancement of the outsourcing and shared services industry has been extensive considering organisations preferred to keep full control of the organisation inhouse. The benefits of outsourcing has changed this mindset in many organizations and as a result they have been able to grow and scale while focusing on core competencies. As the outsourcing and shared services industry tackles the challenges they face and continue to grow, we can expect to see more innovative and disruptive technology which supports business expansion. Something organisations should consider making a part of their growth strategy.

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